THE new Government has no plans to get rid of the hated Universal Social Charge tax — as we’d have to stump up €5.7billion to replace it.
Minister for Public Expenditure Jack Chambers said the controversial USC, introduced in 2011 to save the banks and replace then-health and income levies, won’t be axed.
Deputy Chambers said: “The primary purpose of the USC was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services.
“The USC is an individualised tax, meaning a person’s liability to the tax is determined on the basis of a person’s own individual income and personal circumstances.”
He added: “The USC has played a vital role in meeting the many expenditure demands placed on the Exchequer.
“The USC yield was €5.7billion in 2024, and a projected yield of €5.7billion is expected in 2025.
“If USC were to be abolished it would be necessary to raise this amount from other sources.”
The minister said individuals with income of less than €13,000 per annum are currently exempt from the tax.
USC does also not apply to social welfare payments, such as the contributory and non-contributory State pensions.
This year alone, it is estimated that 1.1million taxpayer units — 33 per cent — will be exempt from paying USC.
Mr Chambers added: “Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution.
“It is my view that a broad based progressive tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term.
“As such I have no plans to abolish the USC.”
He was responding to a parliamentary question from Fine Gael Dun Laoghaire TD Barry Ward, who asked if they were going to abolish USC and if there was a timeline for it.
Fine Gael had promised to make changes to the three per cent USC entry point in the recent General Election and increase it from over €27,000 to €40,000.
